Damning Federal Review of Housing Authority Released

HACM Secretary-Executive Director Willie Hines, Jr. Photo by Jeramey Jannene.

There’s clearly a new boss at the beleaguered Housing Authority of the City of Milwaukee (HACM). And according to the federal government, it’s way overdue.

The newly-constituted board repeatedly asserted its authority Wednesday, demanding more from staff and delaying adoption of the agency’s budget to ensure resident feedback took place.

But a newly-released letter from the agency’s federal regulator and primary funder says far more will be needed. It will soon place the agency into a “recovery agreement,” an addition to the corrective action plan already in place.

The Oct. 18 letter, which followed an August visit by U.S. Department of Housing and Urban Development officials, was released Wednesday near the end of the board’s annual meeting.

Embattled Secretary-Executive Director Willie Hines, Jr. announced his retirement last week. Finance director Rick Koffarnus is also retiring. The chief financial officer position is vacant.

HUD’s seven-page letter lays bare the structural challenges the agency faces. It follows a corrective action plan where HUD said the agency’s management of one of its largest programs was “at risk for serious fraud, waste and abuse.” It forced the agency to outsource management of the $42 million annual voucher program. A more-detailed audit is expected to be completed later this year.

HACM, according to HUD’s latest letter, is beset by a poor governance structure, insufficient and poorly controlled financial staff, inadequate management of its physical assets and a failure to conduct a strategic physical needs assessment.

“The HACM Board of Commissioners is unable to meet its oversight role or responsibilities for a complex, large public housing agency,” says the governance section. The board has not had a full complement of seven members since 2019, and again finds itself with a vacancy.

The Common Council recently approved four new members, most of whom served at their first meeting Wednesday, but longtime member Darian Luckett resigned last week. A HACM spokesperson said he took a new job that had a time conflict with the unpaid board position.

But even if the board has a full complement of members, HUD is taking issue with the governance structure of HACM’s various arms. Travaux, a real estate development arm designed to take advantage of low-income tax credits, isn’t governed by the HACM board, but instead by the HACM executive director, and lacks bylaws for picking members. HUD recommends the Travaux board match the HACM board to avoid conflicting priorities.

The HUD letter suggests HACM staff may also not be providing enough information to board members to make decisions.

“Previous reviews have identified that financial and operational reports
provided to the HACM board contain misleading financial information that misrepresents both the financial position and utilization of HUD programs being administered by HACM,” says the letter.

The report also says that the HACM staff are not exchanging enough information with each other to adequately perform their roles.

The letter was written by HUD’s Wisconsin Public Housing leader Shirley Wong and provided to then-acting chair Brooke VandeBerg in Oct. Hines, Mayor Cavalier Johnson and the other then-board members were provided a digital carbon copy.

Johnson and Hines sat for an interview last week that announced Hines’ retirement, but the mayor said he didn’t ask for his retirement. Hines revealed that he knew his retirement, effective at year’s end, allowed him to earn his full pension of more than $11,000 per month. The news was released late Friday afternoon, with no mention of the October HUD letter.

Hines, on Wednesday, revealed he had looked at his retirement options five years ago. He became executive director in 2022. “It’s with mixed emotions undoubtedly, I will say that,” he told the plan.

He said his retirement, with the different HUD-identified issues and a new board, provides an opportunity for a reset.

“It’s been an honor serving this organization,” said Hines. “Despite what’s been said out in public, I don’t have to remind, our residents are front and center.” He also praised the organization’s staff. “Our existing staff is exceptionally committed.”

Common Ground Southeastern Wisconsin, a broad based coalition that includes many HACM residents, announced a campaign for HACM improvement in March 2023. It has helped file a class-action lawsuit for improvement of conditions at College Court, called for Hines’ resignation and championed the new board members. In demanding change, its leaders have also frequently sparred with Johnson and other city officials.

“HACM’s future is exceptionally bright, yes there have been challenges that have emerged from a number of things,” said Hines.

Dramatic Change in Board Dynamics

The board of the Housing Authority of the City of Milwaukee. Photo by Jeramey Jannene.

The new board members wasted no time in asserting their power.

They delayed adoption of the agency’s budget to ensure resident feedback was taken, blasted an asbestos abatement contract’s persistent cost increases and demanded better reporting from the staff.

“We are committed to establishing clear performance standards and timelines,” said Karen Gotzler, a public housing consultant in other cities.

“We have to have a bit more accountability when it comes to this,” said Alderwoman Sharlen P. Moore, attending her first meeting as a commissioner. “The time has come that we have to tightened up on our processes.”

The two routinely challenged HACM staff to provide reports.

The only board members remaining from earlier this year are Irma Yépez Klassen and Sherri Reed Daniels, the formerly approved chair. At Wednesday’s meeting, Reed Daniels made her first in-person appearance in more than a year and revealed she recently had completed an extended stay in an intensive care unit.

She also insinuated that people had been coming to her door. “My house is really private, even though it’s public housing,” she said. Common Ground members had previously raised concerns about her health and ability to perform her board duties. “I’m not going anywhere. Nothing is intimidating to me.”

Reed Daniels was a more active participant in Wednesday’s meeting, a chance from her virtual attendance where she would often just acknowledge her presence and cede the gavel to VandeBerg. She left before the four-plus hour meeting concluded.

The board elected new member Charlotte Hayslett, an HR consultant, as its chair and Gotzler as the vice chair. Jackie Burrell, a Westlawn resident, is the fourth new member.

The August HUD visit followed HACM being labeled as “troubled” following its 2022 fiscal year. HACM, in a statement, said it is committed to addressing the issues.

“The findings in HUD’s letter highlight serious issues. HACM has already taken steps to address many of these concerns and remains fully committed to resolving the remaining challenges,” said the agency. “To facilitate this process, HUD is developing a recovery agreement that will directly address the assessment findings, establish clear performance standards, and set achievable timelines for improving HACM’s public housing program. HACM will work in close collaboration with the [HUD] Milwaukee Field Office and the Prevention, Recovery, and Transformation team to achieve sustainable improvements and ensure the program effectively addresses residents’ needs and maintains regulatory compliance.”

After the board meeting, two board members confirmed to Urban Milwaukee they had not received the letter until they took their oath of office.

Look for more coverage Thursday of what Hines had to say after the meeting.

UPDATE: An earlier version of this article said the CFO is retiring, the position is vacant and the finance director is the individual retiring.

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